Correlation Between Associated British and Batm Advanced
Can any of the company-specific risk be diversified away by investing in both Associated British and Batm Advanced at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Associated British and Batm Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Batm Advanced Communications, you can compare the effects of market volatilities on Associated British and Batm Advanced and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Associated British with a short position of Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Batm Advanced.
Diversification Opportunities for Associated British and Batm Advanced
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Associated and Batm is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun and Associated British is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Associated British Foods are associated (or correlated) with Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Associated British i.e., Associated British and Batm Advanced go up and down completely randomly.
Pair Corralation between Associated British and Batm Advanced
Assuming the 90 days trading horizon Associated British Foods is expected to generate 0.49 times more return on investment than Batm Advanced. However, Associated British Foods is 2.02 times less risky than Batm Advanced. It trades about -0.03 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.14 per unit of risk. If you would invest 222,100 in Associated British Foods on September 1, 2024 and sell it today you would lose (2,300) from holding Associated British Foods or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Batm Advanced Communications
Performance |
| Timeline |
| Associated British Foods |
| Batm Advanced Commun |
Associated British and Batm Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Batm Advanced
The main advantage of trading using opposite Associated British and Batm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Batm Advanced can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Batm Advanced will offset losses from the drop in Batm Advanced's long position.| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Hyundai Motor | Associated British vs. Toyota Motor Corp |
| Batm Advanced vs. Samsung Electronics Co | Batm Advanced vs. Samsung Electronics Co | Batm Advanced vs. Hyundai Motor | Batm Advanced vs. Toyota Motor Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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